In its analysis of last year's smartphone market in the U.S., NPD found that market share for Apple's iOS went up following the release of the iPhone 4S, to 43 percent of all smartphone sales in October and November from 26 percent in the third quarter. Android, meanwhile, retained its lead, but lost market share towards the end of the year, dropping in October and November to 47 percent from 60 percent in the previous quarter. These are some dramatic shifts in market share but what do they really mean to you and me?

Apple have kept the iPhone 3GS available in order to provide a low-cost option...

The iPhone 3GS is still very expensive unless it is subsidised by a carrier. It costs AUD429 outright in Australia. This is 4x the price of similar Android hardware such as the Huawei X3 (AUD99).

The fact that components for smart phones are becoming increasingly cheaper applies just as much to iPhones as well as Android phones. I would not be surprised to see Apple replace the 3GS with a different low-end model later this year.

You're right of course - the 3GS isn't cheap when paid for outright. Very few people do that though, and most get a phone that's subsidised by their carrier. Often that means that you'll end up on a more expensive talk plan though.

As for Apple not being able to compete with $50 Android phones, well, if an Android phone can be manufactured for $50 then an iOS phone can too. Apple is making a choice to not make phones so cheap though.

And on Apple losing marketshare very quickly in China, I don't really buy that, at least not in any meaningful way. Apple have only been selling iPhones in China for just over a year, and on only one carrier (not a particularly big one), so they have not had time to build up a significant marketshare there yet.

the 3GS isn't cheap when paid for outright. Very few people do that though, and most get a phone that's subsidised by their carrier

Most of the world is on prepaid, and owns their phones. Snap out of looking at larger situation via the perspective of your very atypical place.

As to "kept the iPhone 3GS available in order to provide a low-cost option" - nothing Apple does is really low-cost. They target maybe most "premium" 5% of people; and sometimes (when trying to go further) even shown their inability to compete in broader market - now Apple even openly states they just won't compete in it, they won't target "lesser" people.